1) Which of the following should be reported for capital stock?
a.The shares authorized
b.The shares issued
c.The shares outstanding
d.All of these answer choices are correct
2) What condition is not necessary in order to use the retail method to provide
inventory results?
a.Retailer keeps a record of the total costs of products sold for the period
b.Retailer keeps a record of the total costs and retail value of goods purchased
c.Retailer keeps a record of the total costs and retail value of goods available for sale
d.Retailer keeps a record of sales for the period
3) The following information pertains to Nixon Corp. and its divisions for the year
ended December 31, 2015 .
Sales to unaffiliated customers$3,000,000
Intersegment sales of products similar to those sold to
unaffiliated customers900,000
Interest earned on loans to other operating segments60,000
Nixon and all of its divisions are engaged solely in manufacturing operations. Nixon
has a reportable segment if that segment’s revenue exceeds
a.$396,000
b.$390,000
c.$306,000
d.$300,000
4) Danson Company, a company who uses IFRS reporting standards, has a non-current
asset that has been classified as held-for-sale. When the asset no longer meets this
definition, Danson should
a.remove the asset from the statement of financial position
b.remeasure the asset at fair value
c.measure the asset at the lower of its carrying value before it was classified as
held-for-sale and its recoverable amount at the date when the company decided not to
sell it
d.leave the non-current asset on the financial statements at the current carrying value
5) The costs of organizing a corporation include legal fees, fees paid to the state of
incorporation, fees paid to promoters, and the costs of meetings for organizing the
promoters. These costs are said to benefit the corporation for the entity’s entire life.
These costs should be
a.capitalized and never amortized
b.capitalized and amortized over 40 years
c.capitalized and amortized over 5 years
d.expensed as incurred
6) On May 1, 2014, Marly Co. issued $1,500,000 of 7% bonds at 103, which are due on
April 30, 2024 . Twenty detachable stock warrants entitling the holder to purchase for
$40 one share of Marlys common stock, $15 par value, were attached to each $1,000
bond. The bonds without the warrants would sell at 96 . On May 1, 2014, the fair value
of Marlys common stock was $35 per share and of the warrants was $2.
On May 1, 2014, Marly should credit Paid-in Capital from Stock Warrants for
a.$105,000
b.$ 61,800
c.$ 60,000
d.$ 57,600
7) What is a possible reason for accounts receivable turnover to increase from one year
to the next year
a.Decreased credit sales during a recession
b.Write-off uncollectible receivables
c.Granting credit to customers with lower credit quality
d.Improved collection process
8) Property, plant, and equipment is usually presented in the balance sheet at
a.replacement cost less accumulated depreciation
b.historical cost less salvage value
c.original cost less accumulated depreciation
d.acquisition cost less net book value thereof
9) The floor to be used in applying the lower-of-cost-or-market method to inventory is
determined as the
a.net realizable value
b.net realizable value less normal profit margin
c.replacement cost
d.selling price less costs of completion and disposal
10) On May 5, 2015, MacDougal Corp. exchanged 4,000 shares of its $25 par value
treasury common stock for a patent owned by Masset Co. The treasury shares were
acquired in 2014 for $90,000. At May 5, 2015, MacDougal’s common stock was quoted
at $34 per share, and the patent had a carrying value of $110,000 on Masset’s books.
MacDougal should record the patent at
a.$90,000
b.$100,000
c.$110,000
d.$136,000
11) All of the following may be included under the heading of “cash” except
a.currency
b.money market funds
c.checking account balance
d.savings account balance
12) Whenever a defined-benefit plan is amended and credit is given to employees for
years of service provided before the date of amendment
a.both the accumulated benefit obligation and the projected benefit obligation are
usually greater than before
b.both the accumulated benefit obligation and the projected benefit obligation are
usually less than before
c.the expense and the liability should be recognized at the time of the plan change
d.the expense should be recognized immediately, but the liability may be deferred until
a reasonable basis for its determination has been identified
13) Which of the following costs of goodwill should be amortized over their estimated
useful lives?
Costs of goodwill from aCosts of developing
business combination goodwill internally
a.NoNo
b.NoYes
c.YesYes
d.YesNo
14) Notes to financial statements should not be used to
a.describe the nature and effect of a change in accounting principles
b.identify substantial differences between book and tax income
c.correct an improper financial statement presentation
d.indicate basis for asset valuation
15) The following facts relate to the postretirement benefits plan of Keller, Inc. for
2015:
Service cost$730,000
Discount rate8%
APBO, January 1, 2015$4,000,000
EPBO, January 1, 2015$4,800,000
Average remaining service to full eligibility20 years
Average remaining service to expected retirement25 years
The amount of postretirement expense for 2015 is
a.$1,050,000
b.$1,210,000
c.$1,250,000
d.$1,114,000
16) Harrison Company owns 20,000 of the 50,000 outstanding shares of Taylor, Inc.
common stock. During 2015, Taylor earns $1,000,000 and pays cash dividends of
$800,000.
If the beginning balance in the investment account was $625,000, the balance at
December 31, 2015 should be
a.$1,025,000
b.$825,000
c.$705,000
d.$625,000